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Can sales provide a feel-good factor

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Sales across all automotive segments, including passenger vehicles, two-wheelers, utility vehicles and tractors, grew at a healthy pace year-over-year in May 2022.

However, these figures must be seen in the context of a drop in volumes over the previous month, following a devastating second wave of the pandemic which led to closures and job losses, the effects of which have observed for the rest of the year. the year. Thus, the figures published by the equipment manufacturers are not strictly comparable. However, with the exception of a few OEMs, shipments showed a slight increase even from April 2022 sales, indicating improved buying sentiments.

Maruti saw domestic shipments climb to 124,464 units from 32,903 units a year ago, excluding exports. Hyundai Motor India saw its sales increase by 70% to 42,993 units. The Korean company’s factory experienced six days without production, which also affected sales, the company said in a statement.

Shipments to Tata Motors also saw a significant increase during the month. Its passenger vehicle volumes (including electric vehicles) posted record monthly sales of 43,341 units. Electric vehicle sales crossed the 3,000 mark on a monthly basis in May 2022. The maker of Harrier and Safari models sold 15,181 units in May 2021.

UV sales in Mahindra and Mahindra increased to 26,904 units from 7,748 units in the corresponding month last year. Sales of most other passenger vehicle makers, including Kia Motors, Toyota Kirloskar Motor and MG Motor, posted strong gains from the year-ago period.

Commercial vehicles
The coming into effect of government infrastructure spending of Rs 110 lakh crore and strong replacement demand boosted commercial vehicle (CV) sales. “We expect a 2-3% increase in prices and a further reduction in overall rebates. However, such price increases would have been even stronger without the slowdown in steel prices, so we believe that the CV manufacturers will opt for a moderate price hike,” said a major CV dealer in North India.

Analysts believe that the CV industry which has borne the brunt of inflation has not been able to pass these costs on to its customers. A strong recovery in demand strengthens their confidence to consider a price increase. Generally, the steel which constitutes more than 80% of a heavy truck has almost doubled from ₹36,000-37,000 per ton to ₹70,000 per ton in the past year. Government spending and renewed demand in coal mines will further increase the demand for heavy trucks, according to brokerage firm Motilal Oswal.

Two wheels
On last year’s weak base, shipments from two-wheeler manufacturers were up year-over-year. Demand in the segment has seen some upswing in recent months and is expected to pick up further with the opening of schools and colleges. The segment, however, continues to face weak demand in the entry level of the market and supply issues for models in the 150cc and above segments. Semiconductor shortage has affected production of high-end models, two-wheeler makers say. Due to a shortage of chips, two-wheeler dealers across India have reported that high-end motorcycles have a waiting period of 15-20 days. However, stocks have been rationalized to 30 to 45 days from the previous 40 to 60 days, they said.

Chip shortages are affecting the availability of high-end bikes and scooters.

India’s largest two-wheeler maker, Hero Moto Corp’s domestic sales during the month rose to 4,66,466 units, a 16% increase from April 2022 sales of 418,622 units. The company sold 159,561 units in May 2021 as sales were impacted by the second wave of Covid and lockdowns.

With sales on the rise, there is a sense of optimism in the industry. “The market is strengthening as supply disruptions ease, coupled with increased physical presence in offices and educational institutions,” said Atsushi Ogata, Managing Director, President and Chief Executive Officer. of management, Honda Motorcycle & Scooter India (HMSI) in a statement. The company announced a 10% growth in sales in May.

Expressing a similar sentiment of optimism, Executive Director, Vikram Kasbekar, Hero MotoCorp, said the government’s recent decision to reduce petrol and diesel duties has brought much-needed relief to motorcycle and scooter users. in the country. “We also welcome the steps taken to reduce duties on iron and steel inputs, which should help lower domestic steel prices,” he said.

The increase in liability insurance rates effective June 1 will have some impact on customer sentiments at a time when the industry is seeing signs of recovery. It is not common to have insurance paid for 3-5 years instead of annual renewals as is usually the case in many countries. “The industry is asking for government intervention and support in this regard. The two-wheeler industry provides jobs for millions of people, acting as a revenue catalyst in the country’s economic growth and we must continue to support its recovery and growth,” Kasbekar added. On last year’s weak base, Bajaj Auto saw its domestic sales for May 2022 increase by 85% to 112,308 units.

On the tractor front, sales benefited from an 11% jump in government rural spending. According to the MNREGA website, work rose from 23.26 million households in April to around 31 million in May, which bodes well for the rural economy and suggests an indicator of renewed economic activity.